Category Archives: Millenials

The Tiers Produce Tears: Tear it Down

I recently returned from a marketing trip with my employer, a small Willamette Valley producer of Pinot Noir and Chardonnay. As we explored the Minnesota market, meeting with local wine shops, three separate owners asked pointedly, “Will you be in Total Wine? If so, we won’t carry you.” Early in 2014, Total Wine & More entered Minnesota, grabbed hold, and shook it like a martini. A few locally-owned shops have closed, including the beloved Four Firkins. While appreciated by many buyers for their substantial selection and low prices—a reputation buoyed by titles like “2014 Retailer of the Year” by Wine Enthusiast—we should pause and reflect on the big box economics of Total Wine.

Total Wine carries an array of wines produced by medium to large producers. Their margins? Minimal—lower than any locally-owned shop can match. This clearly harms the boutique shops, but it also abuses the smaller wineries carried by Total Wine. Yes, Total Wine pays the same price to the distributors as any other shop, and so the wineries make equal money when sitting on the shelves of Total Wine. However, the low markup ultimately devalues any wine on the shelf, and consequently any brand on the shelf. Small to medium-sized boutique wineries only thrive if they create a value brand rather than a discount brand. Big box economics undercuts the value.

Let the sun shine upon the back alley short cuts that lure so many of us.

Let the sun shine upon the short cuts that lure so many of us.

Total Wine makes one exception to their minimal mark up philosophy—their private labels. They amass a fleet of private label wines, which they create through contracts with wineries around the world. “You make the wine, we’ll provide the label.” This model allows the producers to move volumes of mediocre to crappy wine easily, thanks to the serious power wielded by large entities like Total Wine. It also masks the grape growing and production facts, allowing Total Wine to mark these private label wines up substantially more than the other brands on their shelves. Total Wine stocks over 2,500 private labels, and sources report 53% of their sales come from these private label wines. This ultimately means that Total Wine’s management, and subsequently store employees, have an incentive to push the private label wines.

Thankfully, unique Minnesota distribution laws allow some local stores to cleverly fight back.

Shop at locally owned and operated stores, wine and beyond. civiceconomics.com “Local Recirculation of Revenue”

This story, of course, is not unique to wine, and this fact only bolsters the message. We all benefit when we shop at locally-owned stores. Michael Pollan, food writer and journalist, first turned me on to the power of voting with my money. Every dollar spent is a vote for that product, that company, that retailer, and the business practices that support that chain of businesses. A son of a rural Minnesota business owner, I shouldn’t have needed Pollan to clarify the power of shopping locally. Yes, you may pay an extra dollar or two*, but the benefits so clearly outweigh the cost, sun to a grain of sand.

 

*Take advantage of case discounts at your local wine shop, and prices come nearer to alignment when comparing the superstores and small shops.

Sources:

Evolution at the Corner of Wine and Education

A recent article by Levi Dalton provoked my interest, churning the cream within my mind. I have taught writing and literature for five years and hold an MA in Teaching. While I have cut back my appointment to pursue a career in wine, I continue to thumb the minds of students. If attuned, the young people in any classroom reverberate a pulse that mimics the larger society.

Learners value independence, more so today than in the recent past. A profound distrust of the old wisdom has slipped into young minds like a fog on cat’s feet. Even proven facts warrant a lifted brow, and we see these realities resonate through our politics.

In his article, Dalton predicts that sommeliers, the pedagogically elite servers of the wine world, will continue to fall out of favor (as a top sommelier himself, he is positioned to make such claims). Thanks to the easy access to information today, wine lovers and newbies alike can seek insight from apps, blogs, message boards, and publications. This crowdsourcing of knowledge diminishes the need for experts.*

The end of the chalkboard education, though not the end of chalkboard use in wineries. The tasting room at Syncline Winery.

The end of the chalkboard, shut-up-and-listen education, though not the end of chalkboard use in wineries. Photo taken in the tasting room at Syncline Winery.

Plus, why sit passively when you can learn yourself? Participation in wine classes at local wine shops and formal wine schools has risen significantly in recent years. This aligns with modern learners’ desire for independence. The wine curious and lovers both prefer to participate in learning and decision-making rather than passively receive “truth” from an expert. I speculate that a survey of wine educators would corroborate that they have seen a corresponding rise in the questioning, doubting, and challenging of the old wine wisdom. Lord knows the wine elite have built one glitzy kingdom—the new generation has arrived with loupes* in hand.

Case in point. While listening to a panel of winemakers and industry elite from the Finger Lakes region at the 2015 Wine Bloggers Conference, one winemaker from a leading producer espoused the importance of moving the second-tier producers away from hybrid and native varietals. The use of grapes such as Maréchal Foch and Catawba tarnished the reputation of the region as a whole. Madeline Puckette, founder of the lauded website Wine Folly, raised her hand and asked, “Why are hybrids so inherently crappy?” Blasphemy! A defense of varietals lesser-than the great vinifera varietals of Cabernet Franc or Riesling!

“There is nothing permanent except change.”

As a Millennial waltzing between the poles of wisdom and modernity, I respect the role of expertise. The foundations of wine knowledge and science have led us to a brave new wine world. However, experimentation, newfound regions and varietals, and individual palates deserve the attention they declare today.

Hopefully I have made some butter.

 

*This is clearly debatable. It remains a strong perception of many millennials none-the-less.

*Loupe = a small magnifying glass used by jewelers and watchmakers.

Unscientific Reflections from a Millennial Wine Writer

As a wine writer, reader, and consumer, I hear a lot about the significance of the Millennial Generation on both the current and future wine trade. Millennials in the United States have taken to wine at a younger age than previous generations–my personal experience concurs. Projections suggest we, Millennials, will continue to play a substantial role in the evolving wine world. Therefore, I posit a few reflections as a Millennial wine enthusiast and writer.

I was born in 1984, placing me on the mature end of the Millennial Generation. During the thirty-one years of my life, the wine industry witnessed a brief decline, followed by a boom sparked by the easy money of the ’90s and an evolving American palate (over-simplification noted). Since the early ’90s, Americans have doubled their consumption of wine (1).

Today, most of my friends and acquaintances fall into the middle and upper-middle class, and nearly all drink wine (only three of us work in the industry). Weekday gatherings, summer celebrations, and special events typically involve wine alongside craft beer. Male-centric events will often go without wine. Conversely, events including more women frequently have a higher proportion of wine served. When my friends and I buy wine, we seek value–quality for the dollars we spend–and rarely spend above $15-$20. $20+ bottles stay in the cellar (basement–let’s be real) for special events. My peers fortunately fall in the rare minority by making it into the upper-middle class. However, this has come with significant debt burdens that accompany master’s degrees and PhDs. We will continue to spend most our dollars in the $8-$15 wine category for the next decade.

Any politically or sociologically aware person has learned of or experienced the effects of a dwindling middle-class. For Millennials, college debt sits at the center of our financial challenges. Skyrocketing college costs in conjunction with the shrinking middle-class should raise concern for the wine industry (as well as other industries). It bodes poorly for the future if trends continue. Wine spending is discretionary spending–first to go if when times get tougher. While the top 25% can sustain a wine industry, including boutique wineries, we should all hope for a broader and more robust economy. In other words, I can only imagine how vigorous the wine industry would be if the Millennial generation also lived the reality of a strong middle-class as we did in the 1950s (a decent graph to demo this point). Drink for thought.millennials

A sample from this Millennial’s cellar

Beyond price, when my friends and I buy wine, we seek authenticity, exploration, and a story–especially stories that display respect for the land. I seek out second label wines from small to mid-size wineries for these reasons. Large businesses make mass-market wines–good, drinkable, and forgettable. They often taste just like that other mass-market wine you drank last week. I have great respect for the mid-size winery that crafts distinctive second label wines. The Old World does a better job, unfortunately, of creating a diversity of wine styles, types, and flavors at lower price points, even within one wine region (the Loire Valley, for example). In addition, those who enjoy affordable, diverse Old World wines have recently benefited from a strong U.S. dollar, which has lowered the price tag on imports.

When you add this up, no surprise that Millennials seek deals. Deals and steals often require middle-men (distributors) to get out of the picture. Naked Wine, Garagiste, and 90+ Cellars all exemplify a model that Millennials have supported and will continue to embrace (see previous post on buying wine). Distributors will continue to see their influence shrink. I shed no tears.

Finally, expect more canned and boxed wine, as well as wine on tap (kegged wine). For the sake of the environment, convenience, and economy, Millennials appreciate these relatively new means of delivery. 

I embrace tradition with ambivalence. Wineries of the world, give me a story I can believe, grow grapes and craft wines of distinction, and speak to how your place expresses itself in your bottles. I will be there to savor and write about it.